Scenario: Wishing to keep Mom at home as long as possible, family enters into a verbal agreement with a friendly neighbor to pay $800 per month to provide assistance to Mom with bathing, groceries, food prep, etc. Three years later, Mom needs nursing home care, is out of funds, and applies for Medicaid assistance.
Result: Under current Medicaid rules, ALL funds paid for caregiving to the neighbor (or alternatively, family member) within the last five years before Mom’s application are considered a “divestment for less than fair market value” and will result in a penalty. The result: Mom will be prohibited from Medicaid benefits she might otherwise be entitled.
How to Pay for Caregiving Services and Still Qualify for Medicaid?
Medicaid divestment penalties can be avoided with a “Caregiving Contract.” Therefore, for families paying for caregiving services for a loved one, it is essential that there be a proper contract in place before payment is made for those services.
Through our Medicaid planning services, our firm is available to assist you with the preparation of a qualified caregiving agreement and supporting documentation.
If payments to caregivers have already taken place prior to a written contract being signed, you should consult with the our firm to understand the impact that such payments will have on the person’s Medicaid eligibility and develop a plan to help cover costs during the penalty period.
For a more detailed explanation of Caregiving Contracts and our Medicaid planning services, please contact our office and schedule an appointment.